Protesters Outside The World Bank Building
Capitalism is the economic system in which the means of production are privately owned and operated for private profit; the means of production include the instruments of labour such as infrastructure,factories,machines and other equipment,and the subjects of labour such as raw materials and mineral resources.The running and management of businesses are done by private actors in the free market;profits are shared by the owners of businesses,while the workers employed by the businesses are paid wages.A free market is one where government intervention is limited,to the enforcement of private contracts and the protection of property rights.
This is in contrast to socialism,based on common ownership and cooperative management of the means of production, a transitional stage leading to communism, a classless and stateless society,structured upon common ownership of the means of production, free access to articles of consumption, and the end of wage labour and private property in the means of production and real estate;as inspired and envisioned,by Karl Marx’ communist manifesto.The main difference between capitalism and communism,therefore,is that unlike capitalism,communism does not allow for economic freedom.Individuals cannot be independent economic actors,solely driven by the profit-incentive.The lack of economic individualism is a key difference.
In pre-industrial agricultural European society,where most people were engaged in one form of agricultural activity or another,the family barn was the only way to store the surplus,that agriculture had helped man to extract from nature.With the advent of feudalism,and population growth,a large section of society was dispossessed of it’s natural land.That way feudalism played a key role in the drive towards industrialization,and urbanization,as the dispossessed,having lost their lands and homes,migrated from the countryside to the cities,in search of work.Thus feudalism created a large pool of dispossessed people,without any means of support,who were as a result available for wage labour.The availability of wage labour set the stage for the rapid industrialization that the world has witnessed.With help from the entrepreneur or capitalist,who managed,organized and paid labour in order to extract surpluses from nature.
If the dispossessed had to sell their labour to live,the motivation for the capitalist was simply to make profit.The greater the surplus he could extract,the bigger his profit.But,would the drive towards industrialization have become so intensive,if the surpluses extracted from nature ,could not be stored efficiently?Imagine if the surplus had to be stored in some warehouse.How big would the warehouse have to be? Think about giants like General motors or Toyota.They would need cities to store their products.Eventually they would have run out of storage space,and been forced to stop production.The capitalist,unable to store his surpluses efficiently and securely,would have concluded that further entrepreneurial efforts were a complete waste of time,energy and resources.Industrialization would have ground to a halt.The industrial revolution would have been still-born,without an efficient means of storing value.And that efficient storage system is based on money.
Money is any object or record generally used as payment,for goods and services,or for for repayment,of debt. There are two categories:commodity money and fiat money.Commodity money is money whose value comes from a commodity out of which it is made. It has value in itself as well as for use as money.Examples are gold, silver, copper, salt, peppercorns.Fiat money is money that has value only because of government regulation or law,like modern-day currency.Money can be used as a means of exchange,unit of account and store of value.As a store of value,money made it possible for the surpluses won by man to be safely and efficiently stored.As money evolved from the commodity phase to paper money,it accelerated the process of industrialization,as it made possible the safe storage of increasingly greater profit,the lure of which drove business investment.The point is that as soon as money made it’s appearance,society was placed on an irresistible trajectory to capitalism.Once it became possible to store almost limitless value as a piece of paper,people became willing to invest time,energy and other resources,in order to create greater value.That is why General motors and Toyota are still producing cars.Capitalism is the natural and logical consequence of the invention of money.
But apparently,African intellectuals of the left disagree,going by their incessant and bitter carping against the Bretton Woods institutions,World Bank,IMF,and their mantra of free markets and privatization.The main plank of their criticism,is that capitalism is inhumane.and somehow unAfrican.But this is not true.Any society that invented money,would in time have ended up capitalist.African societies already had the key element of capitalist societies:individualism.In most African societies,people enjoyed freedom of action with regard to economic activities.Lands and crops were owned and managed by families,not the public.Consider the Igbo society of southeastern Nigeria,virtually every adult had sufficient land on which to farm,the proceeds of which were stored in the family barn.Given the limitations of the barn,in terms of preservation of produce,and the fact that everybody else farmed,their was very little motivation for anyone to accumulate too much surplus.People produced just enough for their needs:immediate food-need and future seed-need.There would have been some trading with produce used as commodity-money.Imagine what would have happened if people could store excess surplus as a piece of paper.The drive for profit would have led to capitalism,eventually,independently of the western world.
Indeed,following the introduction of colonialism,and paper-money,our people abandoned farming,and embraced schooling.And all in pursuit of money,as the bank replaced the family barn.Even though,unlike Europe,where wage labourers had been dispossessed by feudalism,Africans had not been so dispossessed.Just shows that the pursuit of profit is a human instinct.We should stop seeing capitalism as a foreign ideology.No.It is a human ideology.Agreed that primitive capitalism breeds inequality,it also creates great wealth.It is up to the people to ameliorate inequality,by insisting on democracy,rule of law,education,infrastructural development and social security.With these tools,the poor today can lift themselves to great heights tomorrow.In such a socially-dynamic society,it can be argued that Karl Marx’s dream of the classless society,has been achieved.Capitalism is the way forward,if Africa should develop.The sooner we can achieve a consensus on this,the better off we will be.